Question 1

What is the manufacturing cycle efficiency?

Accepted Answer

A)  12.5%
B)  23.5%
C)  76.4%
D)  87.5% B

Question 2

Alghamdi Corporation keeps careful track of the time required to fill orders.The times required for a particular order appear below:  Required:
a.Determine the throughput time.Show your work!
b.Determine the manufacturing cycle efficiency (MCE), Show your work!
c.Determine the delivery cycle time.Show your work!

Accepted Answer

a.Throughput time
= Process time + Inspection time + Move time + Queue time
= 1.1 hours + 0.1 hours + 2.4 hours + 9.3 hours
= 12.9 hours
b.MCE = Value-added time/Throughput time
= 1.1 hours/12.9 hours = 0.09
c.Delivery cycle time = Wait time + Throughput time
= 10.4 hours + 12.9 hours = 23.3 hours

Question 3

If the MCE is equal to 0.6, then 60% of the time a unit is in process is spent on activities that add value to the product.

Accepted Answer

A) True 
 B)False  True

Question 4

In essence, a balanced scorecard lays out a theory of how the company can take concrete actions to attain its desired outcomes.The strategy should seem plausible, but it should be regarded as only a theory.

Accepted Answer

A) True 
 B)False

Question 5

Last year's turnover was closest to:

Accepted Answer

A)  0.05
B)  2.00
C)  20.00
D)  0.50

Question 6

A balanced scorecard consists of a report showing a performance measure such as ROI or residual income for all of the divisions in a company that generate profits.

Accepted Answer

A) True 
 B)False

Question 7

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

Accepted Answer

A) True 
 B)False

Question 8

Craycraft Inc.reported the following results from last year's operations:  At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:  Required:
1.What was last year's margin? (Round to the nearest 0.1%.)
2.What was last year's turnover? (Round to the nearest 0.01.)
3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
4.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.)
5.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.)
6.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)

Accepted Answer

The answer of Craycraft Inc.reported the following results from last...

Question 9

All other things the same, an increase in unit sales will normally result in an increase in the return on investment.

Accepted Answer

A) True 
 B)False

Question 10

Schapp Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below:  The throughput time was:

Accepted Answer

A)  11.3 hours
B)  21.7 hours
C)  17.2 hours
D)  4.5 hours

Question 11

Financial data for Beaker Company for last year appear below:   The company paid dividends of $2,100 last year.The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:
a.Compute the company's margin, turnover, and return on investment for last year.
b.The Board of Directors of Beaker Company has set a minimum required return of 20%.What was the company's residual income last year?

Accepted Answer

The answer of Financial data for Beaker Company for last...

Question 12

Chavin Company had the following results during August: net operating income, $220,000; turnover, 5; and ROI 25%.Chavin Company's average operating assets were:

Accepted Answer

A)  $880,000
B)  $44,000
C)  $55,000
D)  $1,100,000

Question 13

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:

Accepted Answer

A)  12.0%
B)  8.6%
C)  10.4%
D)  1.7%

Question 14

Familia Inc.reported the following results from last year's operations:  At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics:  The company's minimum required rate of return is 13%.
Required:
1.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
2.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
3.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)
4.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

Accepted Answer

The answer of Familia Inc.reported the following results from last...

Question 15

Youns Inc.reported the following results from last year's operations:  The company's average operating assets were $5,000,000.

At the beginning of this year, the company has a $1,400,000 investment opportunity that involves sales of $2,800,000, fixed expenses of $616,000, and a contribution margin ratio of 30% of sales.

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to:

Accepted Answer

A)  9.50
B)  1.64
C)  2.66
D)  2.08

Question 16

Queue time is considered non-value-added time.

Accepted Answer

A) True 
 B)False

Question 17

Throughput time is the amount of time required to move a completed unit from the factory floor to the warehouse.

Accepted Answer

A) True 
 B)False

Question 18

The division's margin is closest to:

Accepted Answer

A)  31.6%
B)  29.4%
C)  38.7%
D)  9.3%

Question 19

Which of the following would not be included in operating assets in return on investment calculations?

Accepted Answer

A)  Cash.
B)  Accounts Receivable.
C)  Equipment
D)  Factory building rented to (and occupied by) another company.

Question 20

Selma Inc.reported the following results from last year's operations:  Last year's margin was closest to:

Accepted Answer

A)  78.1%
B)  6.0%
C)  13.8%
D)  27.9%

Exam 10: Performance Measurement in Decentralized Organizations

What is the manufacturing cycle efficiency?

If the MCE is equal to 0.6, then 60% of the time a unit is in process is spent on activities that add value to the product.

In essence, a balanced scorecard lays out a theory of how the company can take concrete actions to attain its desired outcomes.The strategy should seem plausible, but it should be regarded as only a theory.

Last year's turnover was closest to:

A balanced scorecard consists of a report showing a performance measure such as ROI or residual income for all of the divisions in a company that generate profits.

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

All other things the same, an increase in unit sales will normally result in an increase in the return on investment.

Schapp Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The throughput time was:

Chavin Company had the following results during August: net operating income, $220,000; turnover, 5; and ROI 25%.Chavin Company's average operating assets were:

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:

Queue time is considered non-value-added time.

Throughput time is the amount of time required to move a completed unit from the factory floor to the warehouse.

The division's margin is closest to:

Which of the following would not be included in operating assets in return on investment calculations?

Selma Inc.reported the following results from last year's operations: Last year's margin was closest to: